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Monday, 10 September 2018
Page: 4

Banking and Financial Services

Dear Mrs Wicks

Thank you for your correspondence of 5 December 2017 concerning the petition by the Citizens Electoral Council on their proposals to adopt a number of changes to our banking system, including the introduction of Glass-Steagall legislation in Australia. I sincerely appreciate the time they have taken to collate their petition and I apologise for the delay in responding to you.

The Government has no plans to introduce Glass-Steagall legislation in Australia. Glass-Steagall legislation was introduced in the United States following the Great Depression and legally ensured the separation of retail and investment banking, with the intent of reducing risk of failure in the US banking sector.

The legislation was repealed in the US by the Congress and signed into law by President Clinton in 1999. Additionally, I note that the continued operation of Glass-Steagall laws in the United States would not have prevented the Global Financial Crisis (GFC) and the collapse of major banks in the US. The GFC was primarily caused by the risky lending practices and inadequate capital levels of banks in the United States.

In Australia, the Australian Prudential Regulation Authority (APRA) is the prudential regulator of the Australian financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurance, friendly societies, and most of the superannuation industry.

APRA's role is to establish and enforce prudential standards and practices designed to ensure that, under all reasonable circumstances, financial promises made by institutions APRA supervises are met within a stable, efficient and competitive financial system. The Government supports APRA's roles and functions as the best means of ensuring the stability of the financial system.

In response to the petition's suggestion of co-operation with China's 'Belt and Road' initiative (BRI), Australia recognises the priority that China places on the initiative and we welcome the contribution BRI can make to regional infrastructure. Australia supports regional investment initiatives that are transparent, uphold international standards, meet genuine need and avoid unsustainable debt burdens for recipient countries. The Government is keen to strengthen engagement with China on regional trade and infrastructure development projects which align with these principles and provide commercial opportunities for Australian business including practical initiatives developed under the BRI.

I trust this information will be of assistance to you and the Citizens Electoral Council.

Yours sincerely

from the Treasurer, Mr Morrison